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After ruling halted N.J. foreclosures, experts fear deluge of filings

After ruling halted N.J. foreclosures, experts fear deluge of filings


NJ-

In the past six months, an eerie feeling has settled in the offices of housing counselors and attorneys who confront the foreclosure crisis head-on and help distressed homeowners in New Jersey. The phone hasn’t been ringing any less than it did at the height of the storm, but what is about to hit may be greater than anything the group has seen so far.

Foreclosure filings are down 86 percent so far this year from last, owing in part to a December crackdown by the state’s chief justice that effectively halted proceedings by the country’s biggest mortgage lenders and service companies, according to court data. But lenders are waiting to file an estimated 28,500 foreclosures, and another 55,000 mortgage loans are currently more than 90 days delinquent, according to LPS Applied Analytics, a real estate data firm that tracks mortgage performance. At the current rate, it would take 49 years for banks to clear the logjam of mortgage loans that are currently in the foreclosure process or are more than 90 days delinquent, LPS found.

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NJ Appellate Div. Denies U.S. BANK “Vacate Default Judgment, Foreclosing Interest of MERS in Residential Realty” | WACHOVIA BANK v WRIGHT

NJ Appellate Div. Denies U.S. BANK “Vacate Default Judgment, Foreclosing Interest of MERS in Residential Realty” | WACHOVIA BANK v WRIGHT


SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1422-09T2

WACHOVIA BANK, N.A.,
Plaintiff-Respondent,

v.

GREGORY WRIGHT a/k/a
GREG WRIGHT, MRS. GREGORY
WRIGHT
, his wife, and
LAKES AT LARCHMONT
CONDOMINIUM ASSOCIATION
,
Defendants,
and
MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC
.,
Defendant-Appellant.
_______________________________

EXCERPT:

PER CURIAM

U.S. Bank National Association (US Bank), as successor in interest to defendant Mortgage Electronic Registration Systems, Inc. (MERS), appeals from a Chancery Division order denying its request to vacate the default judgment against it and foreclosing the interest of MERS in residential realty.1 We affirm.

These facts are taken from the motion record. Defendant Gregory Wright purchased real property on Albridge Way in Mt. Laurel Township (the subject realty) on September 2, 2003. On December 2, 2005, Wright contracted with JP Morgan Chase, N.A. (Chase) for a mortgage and a line of credit secured by a second mortgage on the subject realty. On August 9, 2006, Wright refinanced the Chase debts and withdrew additional equitable value from the realty. He borrowed $210,000 from MERS through its agent, Accredited Home Lenders, Inc. (AHL). Inexplicably, the MERS mortgage was not recorded for over a year, until September 17, 2007.

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NEW JERSEY Superior Court Dismissal “Hole in the chain of title, Big enough to drive a truck through” U.S. BANK v. SPENCER

NEW JERSEY Superior Court Dismissal “Hole in the chain of title, Big enough to drive a truck through” U.S. BANK v. SPENCER


U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE FOR
J.P. MORGAN ACQUISITION CORP.
2006-FRE2, ASSET BACKED PASSTHROUGH
CERTIFICATES, SERIES
2006-FRE2
,

V.

ARTHUR SPENCER, MRS. ARTHUR
SPENCER, HIS WIFE; JOHN M.
ALFIS
,

Argued: March 18, 2011
Decided: March 22, 2011
Amended: March 28, 2011
Honorable Peter E. Doyne, A.J.S.C.

John Habermann, Esq. appearing on behalf of the plaintiff, U.S. Bank National
Association, as trustee for J.P. Morgan Acquisition Corp. 2006-FRE2, asset backed passthrough
certificates, series 2006-FRE2 (Phelan Hallinan & Schmieg, PC).

Gary E. Stern, Esq. appearing on behalf of the defendant, Arthur Spencer (Gary E. Stern, Esq.).

EXCERPT:

Analysis

A. Standing

Defendant’s counsel argued plaintiff did not have standing to sue as there was a break in the chain of title by the U.S. Bank assignment. Counsel specified the Fremont Investment assignment was by Fremont to Fremont Investment; the U.S. Bank assignment was by Fremont to U.S. Bank. The break was said to occur when Fremont, and not Fremont Investment, assigned the note and mortgage to U.S. Bank. Defendant’s counsel contended no explanation or turnover of documentation justified plaintiff’s right to prosecute the current foreclosure proceeding.19 However, the U.S. Bank assignment was from MERS as nominee for FGC d/b/a Fremont and its successors and/or assigns. As Fremont Investment was an assignee of Fremont pursuant to the Fremont Investment assignment, there appears to be no break in title when the mortgage and note were transferred pursuant to the U.S. Bank assignment. Nevertheless, plaintiff has provided no documentation or support for its position it is the trustee for J.P. Morgan, and therefore has not established its right to sue on behalf of JP Morgan.

Of greater import was defendant’s counsel’s argument plaintiff did not have standing as there was no proof the named plaintiff ever took physical possession of the note. Plaintiff’s counsel countered the original note was forwarded to him upon request for the location of the note but was inadvertently returned by counsel to plaintiff. It is though surprising the reply did not set forth, competently, plaintiff possessed the note on filing of the complaint.20

Without establishing physical possession of the note, plaintiff may not be an entity which may foreclose pursuant to the first and second categories in section 301, namely, as a (1) holder of the instrument or (2) a nonholder in possession of the instrument who has the rights of the holder.21 N.J.S.A. 12A:3-301. As plaintiff has not alleged, let alone established, the loss of possession of the instrument or the instrument was paid or accepted by mistake and the payor or acceptor recovered payment or revoked acceptance, plaintiff may not be a party who may foreclose pursuant to the third category in section 301, namely, a person not in possession of the instrument who is entitled to enforce the instrument. N.J.S.A. 12A:3-301; 12A:3-309(a); 12A:3-418(d). Therefore, plaintiff failed to establish standing as it is not a person entitled to enforce the note.N.J.S.A. 12A:3-301.

Plaintiff has failed to establish standing as its relationship as trustee to JP Morgan was not set forth; more importantly, though, plaintiff has failed to establish it had or has physical possession of the note and/or failed to demonstrate the note was indorsed. As such, summary judgment for plaintiff is denied and the cross-motion for summary judgment is granted. Although both motions may have been decided on the basis of lack of standing alone, for purposes of completeness, the court also shall analyze whether the evidence presented in support of plaintiff’s motion was competent and thereafter whether plaintiff has set forth a prima facie case in foreclosure.

B. Admissibility of evidence

Defendant’s counsel correctly asserted no competent witness has brought forth admissible evidence. Yoder does not claim to be a person with personal knowledge. R. 1:6-6. Furthermore, the exhibits attached to the Yoder Cert. do not fall within the business records exception as Yoder does not claim be a person with actual knowledge or to have produced the exhibits by obtaining information from such a person.22 N.J.R.E. 803(c)(6). Therefore, the exhibits submitted on plaintiff’s behalf were inadmissible hearsay and the court may not consider them. This is particularly perplexing as this issue was squarely put forth in defendant’s opposition and cross-motion, was not addressed in plaintiff’s reply, and follows shortly after the publication of Ford, supra.

As plaintiff has failed to justify the relief sought by competent, admissible evidence, plaintiff’s motion for summary judgment is denied. Lastly, the court shall analyze whether plaintiff has set forth a prima facie case in foreclosure.

C. Material issues in foreclosure proceeding

While plaintiff’s counsel conceded the circumstances surrounding the alleged default were “unfortunate,” he asserted it “did not create the fire to the premises nor . . . change the zoning of the subject property.” Plaintiff’s counsel set forth defendant failed to make payments pursuant to the executed note, and the mortgage was executed and recorded. However, as issues of fact remain concerning the fact-sensitive allegations of (1) unclean hands (2) breach of the duty of good faith and fair dealing,23 and, (3) as restoration was not “feasible,” why the proceeds were not applied to the sums secured, plaintiff’s motion for summary judgment is further denied.24 Had defendant’s crossmotion for summary judgment been brought solely upon the allegations of unclean hands and breach of the duty of good-faith and fair dealing, the court would have denied the cross-motion and the matter would have proceeded in the normal course to further explore the facts underlying the defenses; however, summary judgment for defendant is appropriate on the basis of lack of standing.

Conclusion

Some are more empathetic than others to mortgagors who are no longer paying their contractual committed amount in a manner consistent with their obligations. Motions for summary judgment or oppositions to motions for summary judgment based on technical deficiencies or defenses are coming before the chancery courts at an ever increasing rate. This case, though, is distinct from the “run of the mill” motion where defendant’s attorney raises “technical objections” in an effort to delay the seemingly inevitable in an attempt to garner for clients as much time in the home as the law will
permit without paying outstanding obligations.

Here, not only has plaintiff failed to establish standing to bring the instant foreclosure action or present admissible evidence by a competent witness, defendant’s competent assertions have also given rise to fact-sensitive defenses.

Defendant’s crossmotion is granted as plaintiff has failed to establish standing and has failed to comply with the court’s January 25, 2011 order.25 Plaintiff’s motion for summary judgment is denied on three grounds: (1) lack of standing, (2) failure to present a prima facie case by presenting admissible evidence by a competent witness, (3) and defenses raised would be in need of further exploration.

The action is dismissed without prejudice.26 The court’s order shall be sent under separate cover.

19At oral argument defendant’s counsel argued there is a hole in the chain of title “big enough to drive a truck through.” Counsel alleged there was no documentation or support indicating the note was assigned by Fremont Investment. This was the same argument counsel made on the papers.

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NJ CLASS ACTION  Silva v. Citimortgage ; Loan Servicer Allegedly Grabbed TARP Cash, Stiffed Loan Mod-Seeking Homeowners Hamp

NJ CLASS ACTION Silva v. Citimortgage ; Loan Servicer Allegedly Grabbed TARP Cash, Stiffed Loan Mod-Seeking Homeowners Hamp


via The Home Equity Theft Reporter a fantastic site!

  • The Complaint alleges that CitiMortgage accepted billions in government bailout money under the Troubled Asset Relief Program (“TARP”) earmarked to help struggling homeowners avoid foreclosure. CitiMortgage, like other TARP-funded financial institutions, is contractually obligated to modify mortgage loans it services for homeowners who qualify under HAMP, a federal program designed to abate the foreclosure crisis by providing mortgage loan modifications to eligible homeowners.
  • According to the lawsuit, CitiMortgage systematically slows or thwarts homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

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BOO-YAA!! NJ Appeals Court Reversal “LPS, LAURA HESCOTT, Assignment Fail, Affidavit Fail” DEUTSCHE BANK NATIONAL TRUST COMPANY v. WILSON

BOO-YAA!! NJ Appeals Court Reversal “LPS, LAURA HESCOTT, Assignment Fail, Affidavit Fail” DEUTSCHE BANK NATIONAL TRUST COMPANY v. WILSON


Excerpt from footnote:

[1] The assignment was executed by an individual identified as Laura Hescott who signed the assignment as an assistant vice-president of Washington Mutual Bank. Ms. Hescott has been identified as an employee of Lender Processing Services, Inc. (“LPS”), a servicer of default mortgages. The bona fides of the practices of this service provider have been the subject of increased judicial scrutiny. See, e.g., In re Taylor, 407 B.R. 618, 623 (Bankr. E.D. Pa. 2009).

The Supreme Court has recognized that “[s]erious questions have surfaced about the accuracy of documents submitted to courts by lenders and service-providers in support of foreclosure requests.” Administrative order 01-2010, 202 N.J.L.J. 1110 (December 27, 2010). The practice of signing and filing documents without any personal knowledge of the information, also known as “robo-signing,” implicates the “overriding concern about the integrity of the judicial process.” Id. at 1111. The order provides that “lenders and service providers who have filed more than 200 residential foreclosure actions in 2010 are required, within 45 days, to demonstrate the reliability and accuracy of documents and other submissions to the court in foreclosure proceedings.” Ibid. On remand, to the extent the order is applicable to plaintiff, plaintiff shall comply with its terms.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for WaMu Series 2007-HEI Trust, Plaintiff-Respondent,

v.

TRACEY T. WILSON , his/her heirs, devisees and personal representatives, and his, her, their or any of their successors in right, title and interest and WILLIS J. WILSON, his/her heirs, devisees and personal representatives, and his, her, their or any of their successors in right, title and interest, Defendants-Appellants.

Docket No. A-1384-09T1.

Superior Court of New Jersey, Appellate Division.

Submitted November 3, 2010.

Decided January 19, 2011.

Tracey T. Wilson, appellant pro se.

Respondent has not filed a brief.

Before Judges Carchman and Messano.

Not for Publication without the Approval of the Appellate Division.

PER CURIAM.

Defendants Tracey T. Wilson and Willis J. Wilson appeal from a final judgment of foreclosure in favor of plaintiff Deutsche Bank National Trust Company, as Trustee for WaMu Series 2007-HE1 Trust. While plaintiff submitted a supplemental affidavit to the trial judge allegedly confirming the assignment of the original mortgage to the named plaintiff, it failed to comply with N.J.R.E. 803(c)(6), and the affidavit should not have been considered.

These are the relevant facts. Plaintiff filed a foreclosure action against defendants. Defendants filed a response, which was accepted as an answer and challenged, among other things, the bona fides of a later assignment of the mortgage. In response, plaintiff filed a motion for summary judgment, but the judge denied relief pending further information regarding the assignment. Thereafter, plaintiff filed a supplemental affidavit, executed by Janine Timmons, a manager of Washington Mutual Bank, attesting to the accuracy of facts “based on our computerized business records maintained in the ordinary course.” She claimed that the note and mortgage had been executed by defendants on December 14, 2006, and the note and mortgage had been sold to plaintiff on January 16, 2007; moreover, an assignment of mortgage was executed on October 31, 2007, two weeks after the filing of the foreclosure complaint on October 18, 2007.[1]

After receiving the supplemental affidavit, the motion judge struck defendants’ answer and permitted the foreclosure matter to proceed by default. Thereafter, a judgment was entered, and this appeal followed.[2]

On appeal, defendants assert that plaintiff’s affidavit regarding the assignment was hearsay and violates the Best Evidence Rule. In addition, defendants claim that they were denied discovery and finally, plaintiff was not a holder in due course.

Although defendants cite N.J.R.E. 803(c)(6), and claim that these were not valid business records, we have more fundamental concern about the substance of the Timmons affidavit. The affidavit makes reference to unidentified computerized business records supporting the verification of the facts attested to, but nothing more is set forth regarding the records other than that conclusory statement.

Recently, the Supreme Court reiterated the relevant factors that must be established by a proponent of documents pursuant to N.J.R.E. 803(c)(6). In New Jersey Div. of Youth and Fam. Servs. v. M.C. III, 201 N.J. 328 (2010), Justice Wallace, speaking for the Court, observed:

Under the business records exception to the hearsay rule, a party seeking to admit a hearsay statement pursuant to this rule must demonstrate that “the writing [was] made in the regular course of business,” the writing was “prepared within a short time of the act, condition or event being described,” and “the source of the information and the method and circumstances of the preparation of the writing must justify allowing it into evidence.” State v. Matulewicz, 101 N.J. 27, 29 (1985) (citation omitted).

[(Id. at 347).]

The affidavit submitted by Timmons falls far short of meeting this threshold showing. Nothing in her affidavit indicates any of the elements identified in either the rule or M.C.

Additional considerations are cause for concern. N.J.R.E. 1002 mandates that, “To prove the content of a writing or photograph, the original writing or photograph is required except as otherwise provided in these rules or by statute.”[3] Here, reference is made to computerized records, yet the record before the trial court or on appeal is devoid of any copies of such records to support the attestations of Timmons. See N.J.R.E. 1001(c) and Fed. Ev. Rule 1001(c) (requiring “original” computer data in the form of printouts or other readable output). Most important, no discovery was permitted to defendants. In such instance, plaintiff should not be allowed to “cut corners” to avoid meeting its burden.

We are satisfied that plaintiff failed to meet its burden to establish the bona fides of the alleged assignment to permit plaintiff to proceed on its foreclosure complaint. We take particular note of the fact that plaintiff has not responded to the appeal so that we are unable to have the benefit of its position on the issues raised by defendants.

We conclude that the appropriate course of action is a remand to the Chancery Division to resolve the issue of the bona fides of the assignment. Accordingly, we reverse and remand for further proceedings consistent with this opinion. We do not retain jurisdiction.

Reversed and remanded.

[1] The assignment was executed by an individual identified as Laura Hescott who signed the assignment as an assistant vice-president of Washington Mutual Bank. Ms. Hescott has been identified as an employee of Lender Processing Services, Inc. (“LPS”), a servicer of default mortgages. The bona fides of the practices of this service provider have been the subject of increased judicial scrutiny. See, e.g., In re Taylor, 407 B.R. 618, 623 (Bankr. E.D. Pa. 2009).

The Supreme Court has recognized that “[s]erious questions have surfaced about the accuracy of documents submitted to courts by lenders and service-providers in support of foreclosure requests.” Administrative order 01-2010, 202 N.J.L.J. 1110 (December 27, 2010). The practice of signing and filing documents without any personal knowledge of the information, also known as “robo-signing,” implicates the “overriding concern about the integrity of the judicial process.” Id. at 1111. The order provides that “lenders and service providers who have filed more than 200 residential foreclosure actions in 2010 are required, within 45 days, to demonstrate the reliability and accuracy of documents and other submissions to the court in foreclosure proceedings.” Ibid. On remand, to the extent the order is applicable to plaintiff, plaintiff shall comply with its terms.

[2] Subsequent to the filing of the appeal, a notice of sheriff’s sale was published. The notice is not part of the record on appeal, and we have no further information regarding the status of the property.

[3] In their brief, defendants refer to the Federal Rules of Evidence. Those rules are not applicable here.

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NJ Appeals Court Reverses SJ “Failed To Have Standing” WELLS FARGO v. SANDRA A. FORD

NJ Appeals Court Reverses SJ “Failed To Have Standing” WELLS FARGO v. SANDRA A. FORD


NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION

DOCKET NO. A-3627-06T1

WELLS FARGO BANK, N.A.,
as Trustee,
Plaintiff-Respondent,
v.
SANDRA A. FORD,
Defendant-Appellant.

Argued October 5, 2010 – Decided

Before Judges Skillman, Yannotti and Espinosa.

On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket
No. F-12259-06.

Margaret Lambe Jurow argued the cause for
appellant (Legal Services of New Jersey,
Inc., attorneys; Ms. Jurow and Rebecca
Schore, on the brief).

Robert F. Thomas argued the cause for
respondent (Pluese, Becker & Saltzman,
attorneys; Mr. Thomas and Rob Saltzman, on
the brief).

The opinion of the court was delivered by
SKILLMAN, P.J.A.D.

January 28, 2011

For these reasons, the summary judgment granted to Wells Fargo must be reversed and the case remanded to the trial court because Wells Fargo did not establish its standing to pursue this foreclosure action by competent evidence. On the remand, defendant may conduct appropriate discovery, including taking the deposition of Baxley and the person who purported to assign the mortgage and note to Wells Fargo on behalf of Argent.

Our conclusion that the summary judgment must be reversed because Wells Fargo failed to establish its standing to maintain this action makes it unnecessary to address defendant’s other arguments. However, for the guidance of the trial court in the event Wells Fargo is able to establish its standing on remand, we note that even though Wells Fargo could become a “holder” of the note under N.J.S.A. 12A:3-201(b) if Argent indorsed the note to Wells Fargo even at this late date, see UCC Comment 3 to N.J.S.A. 12A:3-203, Wells Fargo would not thereby become a “holder in due course” that could avoid whatever defenses defendant would have to a claim by Argent because Wells Fargo is now aware of those defenses. See N.J.S.A. 12A:3-203(c); UCC Comment 4 to N.J.S.A. 12A:3-203; see generally 6 William D.
Hawkland & Larry Lawrence, Hawkland and Lawrence UCC Series [Rev.] § 3-203:7 (2010); 6B Anderson on the Uniform Commercial Code, supra, § 3-203:14R. Consequently, if Wells Fargo produces an indorsed copy of the note on the remand, the date of that indorsement would be a critical factual issue in determining whether Wells Fargo is a holder in due course.

Accordingly, the summary judgment in favor of Wells Fargo is reversed and the case is remanded to the trial court for further proceedings in conformity with this opinion.

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REUTERS | NJ mortgage ruling departs from other U.S. courts

REUTERS | NJ mortgage ruling departs from other U.S. courts


Tue Jan 25, 2011 7:58pm EST

* Lender need not show physical possession of note

* Homeowner challenge Bank of America’s foreclosure right

By Grant McCool

NEW YORK, Jan 25 (Reuters) – A lender need not show physical possession of a note on underlying debt in order to seek foreclosure of a mortgage that has been securitized, a New Jersey court ordered, departing from previous court rulings in the United States.

In the case decided on Jan. 7, Bank of America Corp (BAC.N) sought to foreclose on the home of Janett Alvarado of Bogota, New Jersey, but the note and mortgage for $292,000 had been lost by Washington Mutual Bank [WMPDC.UL] before the loan obligation was transferred to Bank of America.

Courts in the United States have been unwilling to allow banks to enforce their interests without showing that they possessed the physical note.

A Superior Court judge in New Jersey, Mary Thurber, ruled that Bank of America was entitled to enforce Alvarado’s note obligation and was entitled to summary judgment.

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NJ APPEALS COURT VOIDS MORTGAGE: US BANK, N.A. VS. NIKIA HOUGH, ET AL.

NJ APPEALS COURT VOIDS MORTGAGE: US BANK, N.A. VS. NIKIA HOUGH, ET AL.


StopForeclosureFraud.com

While US Bank cannot foreclose on the home, it can sue her to collect the debt she still owes.

Hough’s attorney, Henry Loeb of Somerville, said, “It’s a split decision. She is very happy about having the mortgage voided. But we thought there were decent arguments to have the entire loan voided.”

read the full article here…My Central Jersey

Appeals Court Opinion

US BANK, N.A. v. HOUGH

US BANK, N.A., Plaintiff-Respondent,
v.
NIKIA HOUGH, Defendant-Appellant, and
MR. HOUGH, HUSBAND OF NIKIA HOUGH; NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS; COUNCIL ON AFFORDABLE HOUSING; TOWNSHIP OF PISCATAWAY; NEW JERSEY HOUSING AND MORTGAGE FINANCE AGENCY; STATE OF NEW JERSEY; and THE COMMONS AT PISCATAWAY, INC., Defendants.

No. A-5623-08T3.

Superior Court of New Jersey, Appellate Division.

Argued January 12, 2010.

Reargued April 13, 2010.

Decided September 14, 2010.

Henry A. Loeb argued the cause for appellant (Blumberg & Rosenberg, P.A., attorneys; Mr. Loeb, on the brief).

Vladimir Palma argued the cause for respondent (Phelan Hallinan & Schmieg, PC, attorneys; Mr. Palma, on the brief).

Geraldine Callahan, Deputy Attorney General, argued the cause for amicus curiae Office of the Attorney General (Paula T. Dow, Attorney General, attorney; Nancy Kaplen, Assistant Attorney General, of counsel; Ms. Callahan, on the statement in lieu of brief).

Before Judges Fuentes, Gilroy and Simonelli.

GILROY, J.A.D.

This is a real property foreclosure action. Plaintiff US Bank, N.A. seeks to foreclose upon defendant Nikia Hough’s residential condominium unit located in the Township of Piscataway (the Township). The condominium unit forms part of the Township’s affordable housing obligation and, as such, is subject to the Uniform Housing Affordability Controls (UHAC) adopted by defendant New Jersey Housing and Mortgage Finance Agency (HMFA), N.J.A.C. 5:80-26.1 to -26.26. Hough appeals from the June 12, 2009 order that denied her motion seeking to “void judgment of foreclosure and to dismiss plaintiff’s complaint with prejudice.”

The primary question presented is whether a commercial lender, which makes a loan secured by a mortgage on an affordable housing unit in excess of the amount permitted by N.J.A.C. 5:80-26.8(b), is prohibited from seeking to foreclose the mortgage. We answer the question in the affirmative, holding that the mortgage is void pursuant to N.J.A.C. 5:80-26.18(e). Accordingly, we reverse.

I.

We briefly state the procedural history and facts leading to this appeal. On January 14, 2004, Hough purchased the condominium unit for $68,142.86. To fund part of the purchase price, Hough borrowed $61,329 from Wells Fargo Home Mortgage, Inc., and secured the loan by executing a mortgage in favor of Wells Fargo. Because the condominium formed a part of the Township’s affordable housing obligation, the deed contained the following restriction:

The owner’s right title and interest in this unit and the use, sale and resale of this property are subject to the terms, conditions, restrictions, limitations and provisions as set forth in Ordinance number 88-34, as amended, which Ordinance is entitled “An Ordinance Establishing and Creating Regulations Governing the Conduct of the Purchase and/or Rental of Affordable Housing in the Township of Piscataway[,”]. . . as well as those terms, conditions, restrictions, limitations, and provisions as set forth in the “Affordable Housing Plan of the Commons at Piscataway” dated April 3, 1991 which plan was filed in the Office of the Clerk of Middlesex County . . . on June 20, 1991. Both are on file with the Piscataway Township Department of Planning and Community Development.

The deed was recorded in the Middlesex County Clerk’s Office on March 15, 2004.

On March 25, 2005, Hough refinanced the condominium unit by borrowing $108,000 from Mortgage Lenders Network, USA, Inc. At the time of the mortgage transaction, the maximum allowable resale price of the condominium unit, pursuant to N.J.A.C. 5:80-26.6, was approximately $68,735.41.[ 1 ] Hough executed a promissory note in favor of Mortgage Lenders, secured by a mortgage on the condominium unit. The mortgage was recorded in the Middlesex County Clerk’s Office on April 14, 2005. Hough used the mortgage proceeds to satisfy the Wells Fargo purchase money mortgage then in the amount of $62,795.10, and for other personal unsecured debts, and real property tax liens. Hough netted $20,080.45 from the mortgage refinance. The new mortgage included the same affordable housing restriction contained in the January 14, 2004 deed. On February 1, 2007, Hough defaulted on the mortgage.

On June 12, 2007, Mortgage Lenders filed a complaint in foreclosure against Hough.[ 2 ] On July 20, 2007, Mortgage Lenders assigned the mortgage to plaintiff. On July 8, 2008, plaintiff filed an amended complaint adding as defendants: the New Jersey Department of Community Affairs (DCA), the Council on Affordable Housing (COAH), the Township, HMFA, and Hough’s condominium, The Commons at Piscataway, Inc. Plaintiff served Hough with the amended complaint and summons on August 13, 2008. Plaintiff entered default against defendants on September 18, 2008.

The Township filed an answer alleging priority over plaintiff’s mortgage based on the deed restriction. On December 15, 2008, plaintiff and the Township filed a consent order under which the Township withdrew its answer; and plaintiff agreed to prosecute the action subject to the affordable housing restriction referenced in the January 14, 2004 deed, to provide the Township with notice of any sheriff’s sale, and to request the court return the matter to the Office of Foreclosure as an uncontested action.

On January 26, 2009, plaintiff filed and served a notice for entry of final judgment. On March 9, 2009, plaintiff filed proofs in support of its request for entry of judgment. In the interim, Hough filed a motion seeking to void the judgment of foreclosure and to dismiss the complaint with prejudice, contending that the mortgage violated the UHAC regulations, as it secured a loan in excess of the amount permitted pursuant to N.J.A.C. 5:80-26.8(b).

On April 3, 2009, mistakenly believing that final judgment had already been entered, the trial court denied the motion, concluding that vacating the judgment would improperly bestow a benefit upon Hough because she had been aware of the affordable housing restrictions when she borrowed the money, paid off the Wells Fargo mortgage, and otherwise used or retained the balance of the mortgage proceeds. It is from this order that Hough appeals.

The order appealed from is not a final judgment. A “final judgment in an action to foreclose a real estate mortgage fixes the amount due under the mortgage and directs the sale of the real estate to raise funds to satisfy the amount due.” Eisen v. Kostakos, 116 N.J. Super. 358, 365 (App. Div. 1971). Accordingly, the order appealed from is interlocutory, as it is not final as to all parties and all issues. Janicky v. Pt. Bay Fuel, Inc., 396 N.J. Super. 545, 549-50 (App. Div. 2007). Nonetheless, because of the importance of the issue presented, we grant leave to appeal nunc pro tunc. Gill v. N.J. Dep’t of Banking & Ins., 404 N.J. Super. 1, 8 (App. Div. 2008).

Hough initially argued that we should reverse and declare only the mortgage void, pursuant to N.J.A.C. 5:80-26.18(e). In countering plaintiff’s assertion that she would receive a windfall if the court were to void the entire indebtedness, Hough contended that plaintiff’s assertion “ignore[d] that it is only [plaintiff’s] mortgage that is void under the COAH regulation at issue and not the [n]ote or therefore the underlying debt. Rather, the regulation unequivocally establishes a reasoned and non-confiscatory penalty for a violation of its requirement; a loss of the obligation’s secured status.”

Questioning whether N.J.A.C. 5:80-26.18(e) requires voiding only the mortgage or whether it also requires voiding the indebtedness, we invited the Attorney General to address the issue on behalf of the HMFA. Consistent with Hough’s initial assertion, the Attorney General argued it is only “the mortgage secured by the affordable property that offends the regulation and is void as against public policy.” Nonetheless, contrary to her initial position, Hough contended at re-argument that we should not only void the mortgage, but also declare the underlying indebtedness void as against public policy.

II.

The January 14, 2004 deed restriction placed lenders on constructive notice that the condominium unit was part of the Township’s Mount Laurel[ 3 ] affordable housing obligation subject to the UHAC regulations.[ 4 ] The amount of indebtedness that can legally be secured by a mortgage on an affordable housing unit is governed by N.J.A.C. 5:80-26.8, which provides:

(a) Prior to incurring any indebtedness to be secured by an ownership unit, the owner shall submit to the administrative agent a notice of intent to incur such indebtedness, in such form and with such documentary support as determined by the administrative agent, and the owner shall not incur any such indebtedness unless and until the administrative agent has determined in writing that the proposed indebtedness complies with the provisions of this section.

(b) With the exception of original purchase money mortgages, during a control period, neither an owner nor a lender shall at any time cause or permit the total indebtedness secured by an ownership unit to exceed 95 percent of the maximum allowable resale price of that unit, as such price is determined by the administrative agent in accordance with N.J.A.C. 5:80-26.6(c).

“Administrative agent” is defined in the regulations as meaning “the entity responsible for administering the affordability controls of this subchapter with respect to specific restricted units, as designated pursuant to N.J.A.C. 5:80-26.14.” N.J.A.C. 5:80-26.2.

The “maximum allowable resale price” of an affordable housing unit is determined in accordance with N.J.A.C. 5:80-26.6:

(c) The initial purchase price of a restricted ownership unit financed under [Urban Home Ownership Recovery Program] or [Market Oriented Neighborhood Investment Program] unit shall be calculated so that the monthly carrying costs of the unit, including principal and interest (based on a mortgage loan equal to 95 percent of the purchase price and the Federal Reserve HR15 rate of interest), taxes, homeowner and private mortgage insurance and condominium or homeowner association fees do not exceed 28 percent of the eligible monthly income of a household whose income does not exceed 45 percent of median income, in the case of a low-income unit, or 72 percent of median income, in the case of a moderate-income unit, and that is of an appropriate household size as determined under N.J.A.C. 5:80-26.4.

(d) The maximum resale price for a restricted ownership unit, if the resale occurs prior to the one-year anniversary of the date on which title to the unit was first transferred to a certified household, is the initial purchase price. If the resale occurs on or after such anniversary date, the maximum resale price shall be consistent with the regional income limits most recently published by COAH and calculated pursuant to [N.J.A.C.] 5:94-7.2(b). The administrative agent shall prove all resale prices, in writing and in advance of the resale, to assure compliance with the foregoing standards.

[N.J.A.C. 5:80-26.6.]

Lastly, the prohibition against securing loans in excess of the amount permitted by N.J.A.C. 5:80-26.8(b) with a mortgage against an affordable housing unit is enforced in part by N.J.A.C. 5:80-26.18(e), which provides:

Banks and other lending institutions are prohibited from issuing any loan secured by owner-occupied real property subject to the affordability controls set forth in this subchapter, if such loan would be in excess of the amounts permitted by the restriction documents recorded in the deed or mortgage book in the county in which the property is located. Any loan issued in violation of this subsection shall be void as against public policy.

[(Emphasis added).]

Hough contends that because N.J.A.C. 5:80-26.8(e) provides that “[a]ny loan issued in violation of [the regulation] shall be void as against public policy,” that the regulation prohibits plaintiff from seeking not only to foreclose upon the mortgage, but also from seeking to collect upon the underlying debt instrument. Plaintiff counters that because it has agreed with the Township that it will foreclose upon the condominium unit subject to the affordable housing restrictions, stipulating that any sheriff’s sale will not produce a sale price higher than the maximum resale price as determined by the UHAC regulations, and the property would be sold only to a qualified buyer as determined under those regulations, that we should affirm the trial court’s order denying defendant’s motion to dismiss the complaint. Plaintiff also contends that if we prohibit it from proceeding with its foreclosure action, Hough “would clearly have been unjustly enriched,” when, in fact, her own acts or omissions materially contributed to the mortgage refinance in violation of N.J.A.C. 5:80-26.8(b). In support of that contention, plaintiff cites N.J.A.C. 5:80-26.8(a), which requires an owner to give notice of intent to the administrative agent that the owner intends to incur an indebtedness secured by a mortgage on the affordable housing unit, other than a first purchase money mortgage loan. Plaintiff asserts the record is devoid of any evidence that Hough gave the required notice before she refinanced the property with Mortgage Lenders.

The HMFA, through the Attorney General, contends that N.J.A.C. 5:80-26.18(e) only requires the voiding of the mortgage as against public policy, contending that “[t]he regulation does not affect the underlying debt as that does not undermine the regulation’s purpose.” We agree with the HMFA’s interpretation of the regulation.

“[W]e `give great deference to an agency’s interpretation and implementation of its rules enforcing the statutes for which it is responsible.'” ZRB, LLC v. NJ Dep’t of Envtl. Prot., 403 N.J. Super. 531, 549 (App. Div. 2008) (quoting In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 488 (2004)); see also DiMaria v. Bd. of Trustees of Pub. Employees’ Ret. Sys., 225 N.J. Super. 341, 351 (App. Div.), certif. denied, 113 N.J. 638 (1988). “That deference stems from the recognition that agencies have specialized expertise and superior knowledge in the areas of law delegated by the Legislature.” Lourdes Med. Ctr. v. Bd. of Rev., 394 N.J. Super. 446, 458 (App. Div. 2007), rev’d. on other grounds, 197 N.J. 339 (2009).

The agency’s interpretation need not be the only permissible one or even the one that the court would have chosen had the question been first presented to it. Matturri v. Bd. of Trs. of Judicial Ret. Sys., 173 N.J. 368, 382 (2002). So long as the agency’s interpretation is not “plainly unreasonable,” it will prevail. Ibid. Nonetheless, “we are not `bound by the agency’s interpretation of the statute or its determination of a strictly legal issue.'” ZRB, supra, 403 N.J. Super. at 550 (quoting In re Taylor, 158 N.J. 644, 658 (1999)).

Applying these principles, we conclude that HMFA’s interpretation of N.J.A.C. 5:80-26.18(e) is not “plainly unreasonable” because it supports the primary purpose of the UFAC regulations. Thus, plaintiff is only barred from seeking to foreclose upon the mortgage; it is not barred from seeking to collect upon the underlying obligation.

The Legislature enacted the New Jersey Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to 329, to further the goals of the Supreme Court’s Mount Laurel decisions. The Court in Mt. Laurel I declared that the New Jersey Constitution “requires every developing municipality, through its land use ordinance, to provide a realistic opportunity for the construction of its fair share of the region’s low and moderate income housing needs.” In re Adoption of Unif. Hous. Affordability Controls by the N.J. Hous. and Mortgage Fin. Agency, 390 N.J. Super. 89, 92 (App. Div.), certif. denied, 192 N.J. 65 (2007); see also N.J.S.A. 52:27D-302a. In Mt. Laurel II, the Court mandated that “municipalities were required to address not only the housing needs of their own citizens, but also the housing needs `of those residing outside of the municipality but within the region that contributes to the housing demand within the municipality.'” In re Adoption of Unif. Hous. Affordability Controls, supra, 390 N.J. Super. at 93 (quoting Mt. Laurel II, supra, 92 N.J. at 208-09).

To implement the legislative process of the FHA, the Legislature established COAH, N.J.S.A. 52:27D-305a, and appointed the HMFA as the agency to “establish affordable housing programs to assist municipalities in meeting the obligation of developing communities to provide low and moderate income housing.” N.J.S.A. 52:27D-321. COAH and the HMFA are authorized to adopt and promulgate rules and regulations necessary to carry out their statutory charges. N.J.S.A. 52:27D-307.5 and N.J.S.A. 52:27D-321e, f, and g, respectively.

Pursuant to the FHA, the HMFA developed and now administers housing affordability controls. 36 N.J.R. 3655(a). The purpose of those controls is to “ensure the continuing affordability of housing receiving credit from [COAH] or receiving funding under the Neighborhood Preservation Balanced Housing . . . program.” Ibid. (citation omitted).

In adopting N.J.A.C. 5:80-26.18(e), the HMFA pronounced that it is against public policy for a commercial lender to issue a loan secured by an affordable housing unit for an amount in excess of 95% of the units’ maximum allowable resale price. The focus of the regulation is the use of an affordable housing unit as security for an excessive loan. Stated differently, if a lending institution is permitted to make a loan secured by a mortgage against an affordable housing unit in excess of 95% of the maximum resale price of the unit, default on the loan could result in foreclosure, thus leading to the loss of the affordable housing unit. This would countermand the public policy of ensuring that affordable housing units remain affordable and occupied by lower income households. Ibid. It is with this goal in mind that HMFA asserts that “it is the mortgage secured by the affordable property that offends the regulation and is void as against public policy. The regulation does not affect the underlying debt as that does not undermine the regulation’s purpose.”

We reject defendant’s contention that N.J.A.C. 5:80-26.18(e) requires voidance of both the mortgage and the underlying indebtedness. Such an interpretation would unduly enrich Hough, with Hough having contributed to the mortgage refinance. Regulations, like statutes, must be construed “to avoid . . . interpretations that lead to absurd or unreasonable results.” State v. Lewis, 185 N.J. 363, 369 (2005); see also Cosmair, Inc. v. Dir., N.J. Div. of Tax., 109 N.J. 562, 570 (1988) (“[i]f a literal construction of the words of a statute be absurd, the act must be so construed as to avoid the absurdity. The court must restrain the words.”) (quoting State v. Clark, 29 N.J.L. 96, 99 (1860)).

We reverse the June 12, 2009 order that denied defendant’s motion seeking to dismiss plaintiff’s foreclosure complaint with prejudice. Plaintiff may file a separate action seeking to collect upon the unsecured underlying indebtedness.

1. The record contains a November 13, 2007 letter from the Township, advising that the maximum allowable resale price of the condominium unit on that date was $68,735.41. Although the record does not contain any evidence of the maximum allowable resale price as of the date of the mortgage transaction, Hough certified that it was lower than on November 13, 2007.
2. At time Hough executed the mortgage in favor of Mortgage Lenders, she executed the mortgage as a single person. The complaint also named “Mr. Hough” as a defendant as Mortgage Lenders did not know at the time of filing the complaint whether Hough had married subsequent to execution of the mortgage.
3. S. Burlington County NAACP v. Twp. of Mount Laurel, 92 N.J. 158 (1983) (Mt. Laurel II); S. Burlington County NAACP v. Twp. of Mount Laurel, 67 N.J. 151, appeal dismissed and cert. denied, 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975) (Mt. Laurel I).
4. We note that the January 14, 2004 deed restriction does not conform to the mandatory deed form contained in the Appendixes to N.J.A.C. 5:80-26 that were later adopted on November 23, 2004, effective December 20, 2004. 36 N.J.R. 5713(a). The mandatory deed restrictions contained in the Appendixes prohibit a property owner from incurring an indebtedness secured by a mortgage upon the affordable housing unit as contained in N.J.A.C. 5:80-26.18(d)4iii and in N.J.A.C. 5:80-26.8(b). N.J.A.C. 5:80-26, Appendix A, Mandatory Deed Form for Ownership Units, Art. 4C. Plaintiff does not contest that it was on constructive notice that the property was an affordable housing unit, subject to the UHAC regulations.

This copy provided by Leagle, Inc.

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